Aurelia Butler

BOGOTA (Reuters) -Colombia’s central bank on Friday held the benchmark interest rate at 13.25% for the third time in a row, citing stubborn inflation that, while slowing, remains high and far from the bank’s target, despite government calls to begin cutsThe decision to keep borrowing costs at 13.25% was backed by five of the seven board members. Two of the members backed a cut of 25 basis points. All 21 analysts surveyed forecast the bank would hold the rate stable as it has done since June due to stubborn inflation. The board in June ended a tightening cycle during which it hiked the benchmark interest rate by 1,150 basis points.”The majority of the board considers that, with the information available, it is not prudent to begin a process of reducing interest rates,” bank board chief Leonardo Villar said in a statement, adding that inflation remains persistent and that consumer price growth in August was higher than expected.While Colombia’s 12-month inflation through August slowed to 11.43%, the metric remains almost four times the bank’s 3% goal. A Reuters poll on Friday found the median forecast from 16 analysts put 12-month inflation through September at 10.98%. The analysts also forecast Colombia’s inflation would end 2023 and 2024 at 9.30% and 5.10% respectively. The split decision follows comments last week from board members Roberto Steiner and Finance Minister Ricardo Bonilla, who represents the government on the board. Bonilla said he would push for a rate cut in the meeting, while Steiner said a cut would be imprudent. Colombia’s President Gustavo Petro lamented the decision and hoped cuts would come soon.”I hope that during the next meeting the interest rate falls,” Petro said at a government event. “With this high interest rate, the highest in a long time, we are sacrificing important and as it turns out, employment is more important.The central bank is an independent institution.The central bank’s technical team expects Colombia’s economy to grow 0.9% this year, versus an expansion of 7.3% in 2022. Analysts who do expect rate cuts this year suggest they will be less pronounced than previously forecast. According to the median, the rate is expected to finish this year at 12.5%, about 100 basis points higher than estimated in last month’s survey. More

(Reuters) -Cruise operator Carnival (NYSE:CCL) narrowed its annual loss forecast and swung to a third-quarter profit thanks to higher ticket pricing and robust demand, but concerns around steep fuel costs sent its shares down 5% on Friday.Rivals Norwegian Cruise Lines and Royal Caribbean (NYSE:RCL) have also been able to raise ticket prices and still stay cheaper than hotels, drawing younger crowds looking to splurge on experiences rather than big-ticket discretionary purchases.”Fear around inflation, shrinking consumer savings, student loan repayments, and other spending issues have bogged down shares recently, but should prove to be transient,” Morningstar research analyst Jaime Katz said in a note. “All signals indicate cruising is resonating with consumers.” Taking the shine off its annual outlook, however, Carnival forecast a wider-than-expected fourth-quarter loss and said it would face a net impact of $130 million from higher fuel prices and unfavorable currency exchange rates.It also sees costs driven up by an 18% increase in dry dock days for maintenance and repair work in 2024.Unlike other major cruise operators, Carnival does not hedge against volatility in oil prices.The company was “not thinking” about fuel hedging at this point, CFO David Bernstein told Reuters in an interview.Instead, to reduce the fuel burn, Carnival was looking at fuel optimization technologies and enhancing itineraries, Bernstein added. CRUISE DEMAND THRIVES Cruise operators have benefited from pent-up travel demand following the pandemic and travelers looking for better vacation deals. Cruise pricing is now 35% to 40% cheaper than leisure hotels, said Redburn Atlantic analyst Alex Brignall.Carnival said it had taken more than 2.5 million guests on their maiden cruise this year, with first-timers surging to 170% of prior-year levels in the quarter, driving record quarterly revenues and returning occupancy to pre-pandemic levels.”Our booked position is as far out as we’ve ever seen it,” said CEO Joshua Weinstein. But while demand stays strong, booking volumes for 2024 might recede as inventory get saturated, he added. Carnival posted third-quarter profit of $1.07 billion, or 79 cents per share, compared with a loss of $770 million, or 65 cents per share, a year earlier. More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesThe UK economy bounced back from the pandemic much faster than previously estimated, according to revised official statistics that show Britain is no longer the worst G7 performer. GDP in the three months to June was 1.8 per cent above the pre-pandemic level in the final quarter of 2019, compared with the 0.2 per cent below that level initially estimated.The world’s financial stability watchdog is launching a probe of the build-up of debt outside traditional banks, as it seeks to limit hedge funds’ borrowing and boost transparency. HSBC’s head of public affairs is stepping down, weeks after making a public apology for saying the UK government had been “weak” by curtailing its dealings with China because of pressure from the US.For up-to-the-minute news updates, visit our live blogGood evening.Global bond markets bounced back today after a quarter of heavy losses thanks to signs of inflation easing in the US and the eurozone.In the US, the “core” personal consumption expenditure index — a measure closely watched by the Federal Reserve — fell from 4.3 per cent in July to 3.9 per cent in August, the lowest level since September 2021. The data indicated consumer spending was weakening under the impact of high interest rates, one of several headwinds faced by the US economy including the possibility of a federal government shutdown (see below), surging oil prices, strikes in the Midwest and the expiry of pandemic-era fiscal support.Before today’s data, US stocks and government bonds had been set for their worst month of the year as investors digested Fed signals that interest rates were set to stay higher for longer than previously thought. Eurozone inflation, meanwhile, fell from 5.2 per cent to 4.3 per cent in September. The core figure, excluding volatile energy and food prices, a metric closely watched by the European Central Bank as a measure of underlying price pressures, also dropped more than expected from 5.3 per cent to 4.5 per cent, fuelling expectations that the ECB might end its programme of interest rate rises when its governing council next meets on October 26.Data for Germany, the bloc’s biggest economy, also showed inflation at a two-year low, dropping from 6.4 per cent in August to 4.3 per cent as the removal of last year’s cheap German public transport tickets and fuel prices from the annual comparison pushed inflation down. In France, which is considering a windfall levy to “take back control” of energy prices, inflation was also lower than expected at 5.6 per cent.Before today’s data, eurozone bond markets had been badly dented by Italy’s plans for higher borrowing, with yields reaching the highest levels in a decade. One nagging worry for the ECB is consumers’ expectations of where prices are heading — a monthly survey yesterday showed them rising for the second month in a row. And although investors now expect an end to rate rises sooner rather than later, some policymakers remain hawkish: Bundesbank chief Joachim Nagel warned just last week that the eurozone must avoid “entrenched” inflation “at all costs”.Compare country-by-country with our global inflation tracker.Need to know: UK and Europe economyTwo more UK data points highlighted the impact of higher interest rates on lending. Money supply contracted for the first time since at least 2010 and mortgage approvals fell to their lowest level in six months. Spanish opposition leader Alberto Núñez Feijóo failed in his second and final attempt to form a government following an inconclusive general election. Acting prime minister Pedro Sánchez will now get a chance to secure another term but will need the support of hardline Catalan separatists. Businesses are bracing for the EU carbon border tax, which will impose new costs on those importing into the bloc from October 1. EU commissioner for the economy Paolo Gentiloni wrote in the FT that the tax was not about trade protection, but protecting the EU’s climate ambitions. The European Central Bank is experimenting with generative artificial intelligence to speed up activities ranging from drafting briefings and summarising banking data to writing software code and translating documents. Novo Nordisk’s Wegovy anti-obesity drug has single-handedly stopped Denmark from falling into recession but authorities are worried that the country’s fortunes have become too closely tied to a single company, fearing a repeat of Finland’s fateful over-reliance on Nokia.Need to know: Global economyGoldman Sachs reckons there’s a 90 per cent chance a US government shutdown might start on Sunday. Here’s our guide to the radical Republicans driving Washington to the edge and here’s FT Alphaville’s take on what it all means. The Biden administration announced plans to hold a record low number of offshore drilling leases over the next five years, in a blow to the oil and gas industry. Energy secretary Jennifer Granholm warned that transitioning from fossil fuels would make energy security “infinitely more complex” because of China’s stranglehold on the processing of critical minerals. Energy transition is the “new industrial revolution”, says US climate envoy John Kerry in the latest instalment of our Climate Exchange series.Lan Fo’an, a former provincial governor, is expected to be appointed as China’s new finance minister as a reshuffle of top officials continues. The People’s Bank of China and the National Development and Reform Commission have also had recent changes of leadership.Economists warned Argentina risked hyperinflation following its October election, after populist economy minister Sergio Massa launched a spending spree and frontrunner Javier Milei pledged to dollarise the economy.Lebanon may be struggling with the aftermath of a banking and economic crisis but the wealthy continue to party. Some took their money out of the banks early or used their connections to transfer funds abroad, while others never used the country’s banking system to begin with.Need to know: businessCompanies editor Anne-Sylvaine Chassany says western companies still operating in Russia face increasing difficulties in repatriating profits and a growing risk of state seizure. “Any western company still nurturing the hope of recouping its investment in the country is mistaken,” she says.The European travel sector remains upbeat after a summer boom but demand is starting to weaken in the US. An FT Big Read examines the chances of London’s Heathrow airport finally getting its third runway.Former Apple designer Sir Jony Ive is in talks with ChatGPT creator OpenAI to build the “iPhone of artificial intelligence”, backed by more than $1bn in funding from Japan’s SoftBank.Global dealmaking is at a 10-year low as high interest rates deter private equity activity and strengthening antitrust laws stop companies from pursuing rivals. A new FT film documents how the US is trying to regain its leading role in advanced chip manufacturing and fight back against China’s rise as a technological superpower.Video: The race for semiconductor supremacy | FT Film Science round-upA Nasa spacecraft returned to Earth with rock and dust samples from the 4.7bn-year-old asteroid Bennu. The samples, the largest haul ever to be brought back to earth from an asteroid, will provide clues to the birth of the solar system.Molnupiravir, a Covid antiviral blockbuster drug, was found to have produced permanent mutations of the coronavirus that can be passed from patient to patient, a finding that will increase scrutiny about its usefulness and the billions spent by governments on its procurement.Science commentator Anjana Ahuja explains how “inverse vaccines” could revolutionise the treatment of autoimmune diseases such as multiple sclerosis and type 1 diabetes.Investment in businesses spun out from UK universities fell during 2022 and the first half of 2023 after a decade of consistent growth. The country’s biggest investor in businesses commercialising academic research called for action to encourage funding.As discussions take place at the World Health Organization about a new global pandemic agreement, it is clear that the issue of intellectual property is a serious stumbling block, writes Ellen ‘t Hoen, director of research group Medicines Law & Policy.The State of Nature report on UK biodiversity painted a depressing picture of the continued deterioration of wildlife. Some 16 per cent of the 10,000 species of plants and animals surveyed are threatened with extinction in what is already one of the world’s most nature-depleted countries.Some good newsAs an antidote to depressing environmental news — and a possible warning of what we stand to lose — have a look at some beautiful images from the Nature TTL photography competition. My Kingdom: California sea lions, La Paz, Mexico, a winner in the Wild Portraits section More

(Reuters) – The Federal Reserve held its benchmark overnight interest rate steady at its Sept. 19-20 policy meeting. New data will shape whether the U.S. central bank continues to stand pat at its Oct. 31-Nov. 1 meeting or proceed with another rate increase.The Fed’s target policy rate has been raised to the 5.25%-5.50% range from near zero in March of 2022, and inflation measured by the Fed’s preferred personal consumption expenditures price index (PCE) was 3.5% in August, compared to a peak of 7% last summer.While Fed Chair Jerome Powell has said the pieces of the low-inflation “puzzle” may be aligning, he does not trust it yet. Here is a guide to some of the numbers shaping the policy debate:INFLATION (Released Sept. 29, next release Oct. 12):A key inflation measure fell in August, adding to what many economists feel is likely to be a steady disinflation. The PCE price index, stripped of volatile food and energy costs, rose 3.9% on a year-over-year basis compared to 4.3% in July, and recent month-to-month increases have averaged close to the Fed’s 2% target. The headline rate did increase slightly, from 3.4% to 3.5%, but largely on the basis of energy costs. The Fed uses the PCE measures to set its 2% inflation target, but the decline in the “core” measure will be seen as evidence of slower price increases ahead.Consumer price inflation rose for the second straight month, to 3.7% in August versus 3.2% in July. But the rise was largely the result of higher gas prices, which can be volatile and which Fed officials discount in analyzing price trends. More important to the central bank, underlying “core” inflation stripped of energy and food costs continued its decline, falling to 4.3% on a year-over-year basis compared to 4.7% in July.While the overall picture is somewhat mixed, the inflation data in recent months likely doesn’t change the policy outlook. But it does highlight the time it may take for Fed officials to be confident in a continued inflation decline.INFLATION EXPECTATIONS (Released Sept. 15, next release Sept. 29)Consumers’ estimates of what inflation will average over the next 12 months and the next five years fell notably in September, the University of Michigan reported. At the one-year horizon, the inflation expectation fell to 3.1% from 3.5% in August. At five years, the reading fell to 2.7% from 3.0%.The declines will be comforting to Fed officials who worry that rising inflation expectations can make consumers act in ways that will keep actual inflation higher. The one-year rate, notably, is now around its 40-year average.RETAIL SALES (Released Sept. 14, next release Oct. 17): Retail sales rose more than expected in August, increasing 0.6%. While that was largely due to higher gasoline prices, a separate measure of sales more directly related to economic output also rose slightly even though economists expected it to decline. Even as prior months’ sales were revised lower, the August report showed household spending likely still adding to overall economic growth that has been on the central bank’s radar as an inflationary risk.PRODUCER PRICES (Released Sept. 14, next release Oct. 11)The producer price index (PPI) for August jumped 0.7%, the largest monthly increase since the peak of the Fed’s inflation worries in June of 2022. Goods prices spiked a full 2%, another reason the central bank will be reluctant to declare its inflation battle over. Yet much of that was due to a jump in fuel prices, the sort of thing the Fed will discount. An index of service industry prices rose just 0.2%, and a measure of retailer and wholesaler margins fell, reinforcing arguments that inflation should continue to fall.EMPLOYMENT (Released Sept. 1, next release Oct. 6):The U.S. economy added 187,000 jobs in August, more than economists expected, in a sign of continued labor market strength. But the August report also contained more than a little evidence that a slowdown is underway. Prior months’ gains were revised lower, with June job growth showing just 105,000 positions added, while the unemployment rate rose to 3.8% from 3.5% as more people joined the labor market.Hourly wages grew at a brisk 4.3% on a year-over-year basis, but just 0.2% on a monthly basis, the smallest such jump this year.Investors viewed the overall data as leaning against any further Fed rate increases.The August jobs report is one of the last major data releases the Fed will have before the next policy meeting.JOB OPENINGS: (Released Aug. 29, next release Oct. 3)Powell keeps a close eye on the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for information on the imbalance between labor supply and demand, and particularly on the number of job openings for each person without a job but looking for one. During the coronavirus pandemic there were nearly two jobs for every person seeking a job. That ratio has dropped as the Fed’s rate hikes have slowed labor market demand. By July it had fallen to 1.5-to-1, its lowest level since September 2021. Levels around 1.2 were considered tight for the U.S. labor market before the pandemic.BANK DATA: Released every Thursday and FridayTo some degree the Fed wants credit to become more expensive and less available. That is how increases in its policy rate influence economic activity. But bank failures in the spring threatened broader stress in the industry and a worse-than-anticipated credit crunch. Weekly data on bank lending shows bank credit has fallen on a year-over-year basis since the middle of July.Bank borrowing from the Fed spiked around the failure of Silicon Valley Bank, but has declined since. More

The unemployment rate reached 7.8% in the quarter through August, statistics agency IBGE said on Friday, in line with market expectations and down from the 7.9% seen in the previous rolling quarter.Brazil has been facing a “favorable scenario” on the employment side, IBGE’s research manager Adriana Beringuy said in a statement, which has allowed for a drop in the number of people actively looking for work in the country.The job market’s strength is one of the reasons mentioned by some central bank board members for the authority not to pick up the pace of its 50-basis-point-per-meeting monetary easing, as it tends to support services inflation at higher levels.”It has been a surprise, we’re heading towards the lowest unemployment levels in years,” central bank chief Roberto Campos Neto told a forum on Friday. “Wages are starting to tick upwards but still lag behind.”There are now 8.4 million unemployed people in Brazil, according to IBGE, a 5.9% drop from the previous quarter. The number of employed people, meanwhile, rose 1.3% to 99.7 million.The jobless rate is at its lowest since the quarter ended in February 2015, and the total number of unemployed people stands at its lowest since June 2015.Some economists, nonetheless, do not see excessive pressure on consumer prices stemming from the labor market.”The good news for the central bank is that the job market is not generating inflationary pressures, through wages, which will allow the COPOM to continue cutting interest rates over the coming months,” said Pantheon Macroeconomics’ Andres Abadia.”We think that job market conditions will deteriorate at the margin, but this won’t be anything to worry about and will result from less dynamic economic activity than in the first half of the year.”The central bank cut its benchmark interest rate by 50 basis points in each of the meetings this month and in August, bringing it down to 12.75% after holding it steady for nearly a year to tame high inflation. More